When you trade the right stocks with the right plans, it doesn’t matter if the overall markets are getting smoked.
You can still catch gains like 52% and 64% in penny stocks like we saw yesterday.
And I handed both tickers with trade plans to my weekly watchlist subscribers on Sunday.
It’s great when a plan comes together…
Speaking of plans, a lot of traders are worried about the recent market volatility. If you’re in that camp, do yourself a favor and check out this special live training that my mentor Tim Sykes is hosting on Thursday night.
Your ultimate goal should be self-sufficient.
That’s what Tim taught me.
And not to rely on others for your trade ideas and plans.
That’s what I want to help you with today.
Why These Two Stocks Bucked the Market Trend
Ambrx Biopharma Inc. (NYSE: AMAM) and Sorrento Therapeutics, Inc. (NASDAQ: SRNE) had similar moves to the ones they made last Friday.
They both opened weak, then crossed key levels I said to watch for in my weekly watchlist video…
(SRNE was also a free alert sent to StocksToTrade telegram followers, with a signal price of 33 cents.)
But free alerts and watchlist picks will only get you so far in your trading.
To learn how to find these trades for yourself you have to understand the mechanics behind the trade idea and the move.
So here’s why these levels are significant and why the moves work so well…
A Guide to Making Trade Plans
First, to find potential stocks to trade — use your tools!
Both of these stocks were on StocksToTrade’s top percent gainers list on Friday.
And StocksToTrade’s Breaking News Chat alerted traders to Ambrx Biopharma Inc. (NYSE: AMAM) on Thursday in premarket when it was trading around $2.05.
Once you have big percent gainers with news on your watchlist, it’s time to make a plan…
That’s when you look at the chart to find important psychological levels. You can use these key levels to plan trades in almost any stock…
- Previous day’s high.
- Previous day’s close.
- Multi-day high.
- Resistance levels on the long-term daily chart.
These levels are all potential breakout areas where longs are all in the green and anyone who shorted the stock recently is in the red.
When a stock crosses these levels, especially with high volume, it can mean the trend is continuing to the upside.
That’s why short sellers buy to cover to cut their losses at these levels. And why momentum buyers buy in to join the trend.
If we look at the AMAM chart we can see that it crossed multiple key psychological levels almost at once…
AMAM chart: 3-day, 2-minute candle — courtesy of StocksToTrade.com
It opened above the previous day’s close and above the previous day’s high. And a few minutes later it crossed the multi-day high from Thursday morning.
You don’t have to be perfect and catch the entire move. Make a plan and pick an entry where you’re comfortable and just try to catch a piece of the move. Risking a break below the previous day’s close is a nice tight risk for this trade idea.
Sorrento Therapeutics, Inc. (NASDAQ: SRNE) had a very similar move to AMAM yesterday morning…
SRNE chart: 2-day, 2-minute candle — courtesy of StocksToTrade.com
It opened slightly red but immediately crossed the previous day’s close. And a few minutes later it crossed the previous day’s high.
Again, you can pick whichever entry you’re comfortable with and just try to catch a piece of the upside move.
Like AMAM, SRNE offered a nice tight risk level at the lows of premarket consolidation. f
These kinds of morning moves happen fast. But when a stock makes a bullish move over multiple key levels, it doesn’t matter what the overall markets are doing…
What matters is the trend of the stock you’re trading, and understanding where the buyers and sellers are.
Tune into my Market Update videos to learn more about the mechanics of the market and stock moves.
I send them out three times a week to keep you in touch with what’s happening in the markets.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade